Accuchex Blog

Since January 1st of this year, California employers in almost every industry have been subject to the new wage increase for their minimum wage employees.

This is arguably one of the more costly labor laws California employers have had to comply with since the beginning of this year. In addition to the state mandated increase in minimum wages, a number of local municipalities have instituted additional wage hikes, as well.

Labor Laws: California Minimum Wage one of the Highest In the U.S.

The California Legislature passed legislation AB10 in September 2013, which raised the minimum wage for all industries. The California Department of Industrial Relations (DIR) website explains the law's requirements on California employers:

"Although there are some exceptions, almost all employees in California must be paid the minimum wage as required by state law. Effective January 1, 2016, the minimum wage in California is $10.00 per hour. There are some employees who are exempt from the minimum wage law, such as outside salespersons, individuals who are the parent, spouse, or child of the employer, and apprentices regularly indentured under the State Division of Apprenticeship Standards."

Only Washington D.C. has a higher minimum wage at $11.50 an hour, and Massachusetts has matched California at $10 with a dollar an hour jump scheduled for next year in 2017. 

The fiscal impact on California employers and the state's economy is still being hotly debated. Part of the difficulty is that it will not only increase existing minimum wage salaries currently being paid, but could also impact the salaries of employees who had recent wage increases due to merit or promotion, and are now at or close to the new minimum. 

Proposed New California Labor Law for 2016

the current increase may not be the last. A California initiative calling for a $15 minimum wage by 2021 is making progress towards being on the ballot for state voters in November after gathering more than enough signatures to qualify.

The Fair Wage Act of 2016 will raise the minimum wage for all California workers by $1 annually, effective January 2017. Once the minimum wage reaches $15, it will automatically go up each year to match the cost of living. Cities will continue to have the option of setting higher local minimum wages.

Additional Local Minimum Wage Increases Drive Costs Even Higher

California employers in San Francisco and Oakland have recently been subjected to even far more significant mandatory wage increases that went into effect in 2015.  On October 1, 2015 the minimum wage in Berkeley went up to $11.00 per hour and on October 1, 2016 the minimum wage in Berkeley will be $12.53 per hour.

Other cities are on track to do the same. San Diego and Los Angeles have already taken legislative steps towards substantially higher minimum wage requirements.